Home-price growth in 20 major US cities sped up in March, pressuring buyers as the key selling season kicks into gear.
Prices in a measure of 20 cities increased 7.4% from a year earlier, larger than the 7.3% annual gain in February, an S&P CoreLogic Case-Shiller index shows.
Homebuyers are facing a severe affordability crisis made worse by mortgage rates hovering around 7% and price growth that’s only accelerating. At the heart of the problem is the lack of previously owned homes for sale: Few owners are willing to move if it means letting go of a loan locked in when rates were cheap. While listings have increased in recent months, inventory still remains historically tight.
San Diego’s 11.1% advance was the biggest annual gain among the 20 cities, followed by New York’s 9.2% then Los Angeles-Orange County and Cleveland at 8.8%.
Price growth in the 20 cities has outpaced gains nationally, which were up 6.5% in March. Major cities tend to be places where affordability is most squeezed and often include areas where there’s little room to build more housing to alleviate price pressures.
The Northeast is the “top performer,” according to Brian Luke, head of commodities, real and digital assets at S&P Dow Jones Indices.
“COVID was a boon for Sunbelt markets, but the bigger gains the last couple of years have been the northern metro cities,” Luke said in a statement.
On a month-over-month basis, gains eased slightly. The measure of 20 cities was up 0.3% in March from a month earlier, lower than the 0.6% increase in February, according to a seasonally adjusted measure.
“Given the surge in mortgage rates between the end of March and the beginning of May, we expect both home-price growth, inventory, and home sales to moderate in future housing market data releases,” Realtor.com Senior Economist Ralph McLaughlin said in a statement.
Jonathan Lansner of the Southern California News Group added to this report.
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